U.S. Mobile-Ad Sales Expected to Nearly Triple This Year

Advertisers are warming up to mobile advertising faster than expected, according to a new report released on Monday by eMarketer.

The research firm says it now expects U.S. mobile advertising to nearly triple this year to more than $4 billion, largely driven by stronger ad sales for Facebook Inc., Google Inc., and Twitter. In September, eMarketer predicted a more muted increase of 80%.

“For a long time advertisers have viewed the mobile marketplace as a very experimental medium,” said Clark Fredricksen, a vice president for communications at eMarketer. “That is steadily getting better.”

Google is expected to record $2.17 billion this year in mobile ad sales, largely from its search business. Facebook is expected to come in second with $339.3 million after introducing mobile ads this year. (See WSJ’s related story today: Facebook’s Mobile-Ads Gambit)

Music-streaming service Pandora is expected to make $224.8 million in mobile-ad sales this year, nearly double that of last year. Twitter, which made no money on mobile last year, should generate about $134.9 million in mobile-ad sales, according to eMarketer.

Given the trajectory, eMarketer heavily revised its estimates for the next few years. U.S. mobile advertising sales should now hit $7.19 billion next year and nearly $21 billion by 2016.

Mobile ad sales are improving as technology companies race to ramp up their offerings on smartphones to woo both consumers and advertisers. Facebook, for instance, which didn’t begin selling ads till earlier this year, has now rolled out several new ad products for mobile, including ads that show users brands “liked” by friends. According to eMarketer, Facebook is on track to be the largest publisher of mobile display ads this year, with 18.4% of the market, though Google will be a close second with a 17% share.

For Google and Facebook, mobile is a must-win battleground. Though both companies still make the bulk of their money from the desktop, their consumers are spending more and more time on tablets and smartphones. As the migration from desktop to mobile continues, Google and Facebook must scramble to increase their mobile ad inventory– despite the limited real estate on smaller screens– and create new, compelling products for advertisers. The transition has been a tough one for Facebook, which highlighted the challenge in the run-up to its rocky initial public offering.

For now, mobile remains just a sliver of the larger U.S. advertising market.

According to eMarketer, it is expected to represent just 2.4% of the ad market this year, and 11% by 2016.